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Jersey Shore businesses wait on Sandy loans

Russ Zimmer, Asbury Park Press
Published 9:41 a.m. ET Dec. 17, 2014

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Tim and Beth McLoone react this summer as their iconic restaurant, the Rum Runner in Sea Bright, is demolished. They’re waiting for rebuilding aid promised by the state, but time is running out.(Photo: file photo)

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No money has been released for the 12 approved NJ Stronger construction loans.

SEA BRIGHT – Restaurateur Tim McLoone wanted to rebuild and reopen his landmark Jersey Shore restaurant by sometime next summer — but now fears he may have to halt construction because he hasn’t received money promised through the Stronger NJ Business Loan Program.

“Quite honestly, we can’t go much further. If we don’t get this solved soon, we’re going to have to stop,” said McLoone, owner of the Rum Runner. “If we can keep going, we might get a piece of next summer. We haven’t been open in two summers, and to think we might miss another.”

McLoone isn’t the only one stuck in rebuilding purgatory.

Not a single businesses approved for the low-interest Stronger NJ loans has received a dime.

In all, the New Jersey Economic Development Authority approved 12 loans, for a total of $17.5 million, so that Sandy-flooded businesses could get financing needed to rebuild.

About half of those loans await environmental approvals. But other business owners — like McLoone and Gigi Liaguno-Dorr, who hopes to reopen the waterfront bar and restaurant Jakeabob’s Bay in Union Beach — have the approvals, but don’t have the cash.

In Liaguno-Dorr’s case, she got the state Department of Environmental Protection’s blessing in July, two months after she was approved for the loan.

“I kept saying if we could get (construction) going in September then we’ll be good for the (summer) season,” she said. “Well, I’m not going to be good for the season.”

Missing a third consecutive summer starts to change the equation for Liaguno-Dorr on whether Jakeabob’s remains a viable business opportunity.

“If this is how it’s going to end ...” Liaguno-Dorr said, starting to choke up.

“We can’t accept that,” her fiancee, Wally Van Orden, interrupted.

Unlike Dorr, McLoone has been able to start construction using other sources of money, but those are almost exhausted.

“We have not received anything either,” McLoone said. “We’re in the same boat.”

A spokeswoman for the NJEDA said the state has been prioritizing NJ Stronger working-capital loans, which don’t have the same rigorous demands from the federal government, which is providing the funds.

Those relatively relaxed standards help the money move quicker — about half of the working-capital loans, or $25 million, have been paid out at least in part, according to the NJEDA.

Indeed, Jakeabob’s was approved for nearly $300,000 for working capital, some of which Liaguno-Dorr used as down payments for engineers and surveyors, and some of which she used to survive without any income from her business. The $300,000 isn’t enough to break ground, however.

HUD money

The loan program is paid for by Sandy disaster aid that flows through the U.S. Department of Housing and Urban Development, which is responsible for making sure the money is spent appropriately. That’s been a key concern since rampant misuse of taxpayer money after Hurricane Katrina in 2005, said Holly Leicht, regional administrator for HUD in New York and New Jersey.

Federal law requires meticulous environmental reviews and a “cost reasonableness review,” which takes a line-by-line look at the construction budget.

Combined, those two tasks can take months to complete.

But what if in trying to ensure the loan money is going to be spent properly, the process becomes so sluggish that the businesses you intend to save end up withering on the vine?

“It’s not a perfect system,” Leicht responded. “It’s not easy to get this money out the door quickly.”

Leicht said she doesn’t want to sound like she’s making excuses, but her agency isn’t built for the expedited response.

“Our money isn’t as quick as FEMA’s,” she said, before pledging to continue working with New Jersey on ways to speed it up.